Part D offers people prescription drug plans through traditional Medicare. Private companies, rather than federal or state offices, administer Part D.
Original Medicare (parts A and B) do not include prescription drug coverage. For this reason, most people with Original Medicare choose to add a prescription drug plan (Part D) to their Medicare plans.
This article explains Medicare Part D. It discusses what Part D covers, its costs, and what types of medications it includes.
Glossary of Medicare terms
We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:
- Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
- Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
- Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
Medicare Part D refers to prescription drug plans that offer at least the standard level of coverage that Medicare requires. Private insurance companies sell and administer these plans.
A person with Original Medicare can sign up for Part D as long as they have either Part A, Part B, or both.
An individual with a Medicare Advantage (Part C) plan generally cannot sign up for Part D. Medicare Advantage is an alternative to Original Medicare. It involves paying a single premium for Medicare coverage. Most Part C plans also include prescription drug coverage and some additional services.
Most Medicare Part D plans classify prescription drugs into levels, or tiers. The lowest tier may include generic medications, which usually cost the least. Brand-name specialty medications usually fall in the highest tier, as they are often the most expensive.
To pay for medications using Medicare Part D, a person generally has to meet a deductible first. Though private companies administer Part D plans, Medicare requires that none of these plans have a deductible greater than $545 in 2024.
It is possible, however, to enroll in a Medicare Part D plan with no deductible. This depends on the private insurance companies that offer Part D plans within a person’s geographic area.
Once a person meets their deductible, they will pay either a copayment or coinsurance cost for medications in the future, and Medicare will cover the remainder of the cost.
Learn more about Medicare plans and coverage.
While Medicare parts A and B help provide hospital and medical service coverage, they do not cover most prescription medications that a person takes at home.
Prescription medications can be expensive, so Medicare requires a person to have prescription drug coverage to protect them from having to pay excessive prescription costs. To get coverage, individuals may choose Part D if they have Original Medicare or a Medicare Advantage (Part C) plan that includes drug coverage.
A person can learn about available Medicare Part D plans and enroll in several ways, including:
- online at medicare.gov
- by phone at 800-MEDICARE (800-633-4227)
- in person at a local insurance office
In 2024, the average monthly premium for Medicare Part D is $34.70, according to the nonprofit KFF. However, the cost of a plan can vary depending on the specific plan and local availability.
Also, the insurer may increase the premium according to the person’s income. The maximum premium-based income surcharge for 2024 ranges from $12.90 to $81.00, per KFF.
Medicare defines a high income as earning at least $103,000 per year as an individual or $206,000 per year as a couple. Any surcharge will depend on how far earnings exceed that threshold.
If a person signs up for a Part D plan outside of the enrollment period, they may be charged a penalty on top of their monthly premium.
Read more about Medicare costs.
Medicare requires that plans cover at least two drugs in most health categories. For example, one category may include medications for blood pressure, while another may include drugs for diabetes.
These plans also cover almost every drug in some medication categories, including:
- anticonvulsants
- antidepressants
- antipsychotics
- cancer medications
- drugs to manage HIV
- immunosuppressants
Each Medicare Part D plan has a list of covered medications. This list is called a formulary. A person must review a plan’s formulary before enrolling to ensure it covers any medications that they take.
A person can also apply for Extra Help, a program that provides additional coverage for people with low incomes. In addition, Medicare can put exemptions in place to help reduce the costs of specific medications.
Medicare has several enrollment periods throughout the year. During these, a person can add coverage or switch their existing coverage.
An individual can sign up for Medicare Part D when they are initially eligible for Medicare, known as the initial enrollment period. This period includes:
- the 3 months before a person’s 65th birthday
- the month of their birthday
- the 3 months after their 65th birthday
For people who already have Medicare, Part D open enrollment is October 15 through December 7. During this period, a person can enroll in a Part D plan or switch plans.
If a person switches plans during this time, their new coverage will begin on January 1 of the following year.
A person can also sign up for Medicare Part D at other key times, such as if they move out of their current plan’s service area or otherwise lose coverage.
A person should not go more than 63 days in a row without prescription drug coverage, or they may have to pay Medicare premium penalties.
The term “donut hole” refers to a gap in coverage.
In 2024, the donut hole occurs when a person and their plan have spent more than $5,030 on covered medications.
Once spending reaches this figure, a person will pay for brand-name drugs but at no more than 25% of the price.
In 2024, once a person’s out-of-pocket spending reaches $8,000, they receive catastrophic coverage. This means they will not have to pay anything for their prescription drugs for the rest of the year.
Learn more about the Medicare donut hole.
Medicare resources
For more resources to help guide you through the complex world of medical insurance, visit our Medicare hub.
Medicare Part D provides prescription drug plans through private insurance companies.
Only people with Original Medicare can generally enroll in a Part D plan.
To receive the least expensive coverage, a person should enroll close to their 65th birthday or within 63 days of losing their previous prescription drug coverage.